Monday, September 28, 2015

**It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.**

This is the fourth time I'm posting my prediction. Please bare that I will repeat some lines for new readers :) Also I always care to post my predictions before any official news or other analysts have given their views (typically too late after the queue starts at the stations).

Why is this sort of important? Say every month you know ahead of official price announcement and let's assume there is a price swing on average of 10 sen per month and you can fill in 35 litres. 0.10 x 35 x 12 = RM 42 savings a year. Obviously you don't feel it's a lot but every year you will always call and beg for credit card waiver of RM50 on govt service charge? Ironic isn't it? :)

Oct 2015
Global oil price has somewhat stabilized towards the $50 per barrel range for entire September. It declined the sharpest (~20%) in August before recovering sharply in the last days of August.

MYR to USD continues to deteriorate even without a US Fed hike in Sept largely due to negative sentiments and also Moody's recent article on junk status: Malaysia deserves junk status like Brazil, says Moody’s. The US Fed will have another round of debate among the 10 central bankers on whether there would be a 0.25% hike in Oct.

On the home front, we had a somewhat peaceful "Red Shirt" rally. Super Moron is still in charge although the country has been running on auto-pilot for quite some time. October is also the month of our tabling of 2016's Budget but that is still 3 weeks away. Overall I do not see any major political event impacting the fuel price announcement coming 30th September after dinner.

No point gathering data for 26-30 as it makes little impact on the average

It's obvious, higher global oil price + weaker MYR it all points to higher pump fuel price for the month of October. Thanks to a reader for providing me 'valuable' insights on how fuel is computed in Malaysia I have devised the table above. It 'should' provide a better estimate for the amount of fuel hike/reduction in my future postings. As such I predict fuel price to increase by 15 sen! Please go ahead and fill your tank before 1st October. I suggest doing it early Wed morning before you head to work.

Below are my previous predictions (thru emails, whatsapps, blog posts and word-of-mouth so I might have missed people out therefore decided to put it in blog is the best). **It is easier to predict the direction of fuel price than to estimate amount of swing of fuel price due to the government REFUSING to disclose the compute mechanism.** My predictions are based on WTI crude oil price, performance of Ringgit (added after Mar) & politics conditions (which was added after May). My total savings to date: RM 40.25 (not very far off RM 42 and we are already 3/4 thru 2015)

Sep 2015
"Tough call" but I predict fuel prices to be kept at current pump price (RM2.05 for RON95). I also maintain a small possibility that a small 5 sen cut is possible. Refrain from pumping petrol until 1st September, either way you don't lose anything.Ron 95 RM 2.05 (Aug) -> RM1.95 (Sep) (prediction set, saved RM 3.50)

Aug 2015
Oil is now heading to a new normal of $50 per barrel (down ~15%). No changes to my expectation of a continuation of a weaker MYR. I predict fuel prices to fall back15/10 sen (RM2.00/RM2.05 for RON95). Worst case they will maintain it or give only a small 5 sen cut.Ron 95 RM 2.15 (Jul) -> RM2.05 (Aug) (prediction set, saved RM 3.50)

Jul 2015
WTI crude oil future still very near $60, however the performance of the Myr has been abysmal. It continues to weaken from 3.65 to almost 3.80. I expect prices to maintain (RM2.05 for RON95). No harm to pump though, if there is a remote chance of increase it would be 5 sen. It is extremely unlikely to go down.Ron 95 RM 2.05 (Jun) -> RM2.15 (Jul) (prediction set, saved RM 3.50)

Jun 2015
Oil per barrel still hovering near $60 and likely to be within this range. Myr has weaken again, now 3.67 and expected to weaken even more. Honeymoon is over. Like the u-turn on prepaid card GST fiasco, petrol will go up 20 sen.Ron 95 RM 1.95 (May) -> RM2.05 (Jun) (prediction set, saved RM 3.50)

May 2015
Aboi's fuel price est for May. More likely than not likely to go up 10 sen on 1st May. Due to oil futures hovering slightly above $60 (up 10%) while Myr only strengthen by 3% against the US dollar.Ron 95 RM1.95 (Apr) -> RM1.95 (May) (prediction off, should have factored in the two 'buy' elections)

Apr 2015
50/50 chance for price to remain or go slightly lower (5 sen/10 sen). It is highly not likely to go up.
WTI futures hovering at $50-55 instead of $60.
Offset by weaker ringgit RM3.70 instead of RM3.60.
Saudi declared war on Yemen but expected not to cause any break in oil production levels as of now.
Hence the bet best is to wait until April 1 to fill up
Unlike 28th no need to beratur...Ron 95 RM1.95 (Mar) -> RM 1.95 (Apr) (prediction set)

Mar 2015
Time for my monthly update again. I expect fuel price to go up by 5 sen/10 sen in March.
This is because WTI oil futures is around $55-60 as compared to a month ago when it was $48.
Not likely to maintain prices unless gohmen wanna give you ang pow.
Don’t wait till 28th, later need to 'beratur'..Ron 95 RM1.70 (Feb) -> RM1.95 (Mar) (prediction set, saved RM 5.25)

Feb 2015
I lost the original message. Continue to expect a decrease in pump oil price as per barrel dropped to $45. This is when America shale oil pumped record amount of oil and the Sheikh's continue to fight for market share at the expense of market price. If not mistaken I predicted a 10 sen drop.Ron 95 RM1.91(Jan) -> RM 1.70 (Mar) (prediction set, saved RM 7.35)

Jan 2015
I lost the original message. Expected a decrease in pump oil price due to oil dropping below $55 per barrel. If I remembered correctly I estimated a 20 sen drop.Ron 95 RM2.26 (Dec) -> RM1.91 (Jan) (prediction set, saved RM 12.25)

Thursday, September 24, 2015

It was another volatile week for global shares with strength into the Fed meeting, partly in anticipation of the Fed leaving interest rates on hold, and then European and US shares completely reversing their gains as the Fed provided a reminder about China and emerging market driven global growth worries.At the very least share markets remain vulnerable to more volatility over the next month or so as we are still in a seasonally weak period of the year for shares and uncertainties regarding China and the emerging world remain. A failure to resolve the US budget impasse by October 1 could also add to volatility.United StatesUS economic data remains mixed and suggests that growth is continuing to trend along around 2-2.5%. Uncertainty about Chinese and emerging market growth along with continued uncertainty about US inflation has clearly got in the way and the Fed has rightly opted to leave rates on hold. While the Fed is likely to be comfortable that it has seen enough improvement regarding the jobs market it still seems to lack “confidence that inflation will move back to its 2% objective over the medium term.”Get ready for some noise out of Washington. The US budget and debt ceiling may hit the headlines again soon with Congress needed to pass budget funding for the new fiscal year that begins on October 1.

EurozoneEurozone industrial production and construction activity was a bit stronger than expected in July, but inflation for August fell to 0.1% yoy and core inflation fell to 0.9% yoy, both of which are well below target.The latest Greek election has been non-event for global investment markets. The election has seen Syriza win the largest share of votes, and it looks on track to form a coalition with the same party it has governed with since the January election. Eurozone business conditions PMIs (Wednesday) are likely to remain solid and bank lending growth (Friday) should show further signs of gradual improvement. The focus will also be on the Catalonian regional election (Sunday Sept 27), but with the polls showing Catalonians preferring to remain in Spain it hopefully won't be an issue for markets.

Asia

Average Chinese property prices continued to rise in August with more cities now seeing gains. Chinese property related risks are continuing to recede.In China, the focus will be on whether Caixin/Markit manufacturing conditions PMI for September has continued to deteriorate or more likely shows signs of stabilisation and bottoming as has been evident in some other recent economic data.

Japan will see the release of its manufacturing conditions PMI (Wednesday) and inflation data Friday, with the latter likely to weaken thanks to lower energy prices taking inflation further away from the BoJ's 2% target.

**Repeat "again" with tiny modifications**

Share markets are likely to see more volatility in the next month or two. We are still in a seasonally weak period of the year for shares (Sept and Oct), uncertainties regarding China and the emerging world are likely to intensify in the short term, posing risks for global growth and the uncertainty around US Fed moves.

Monday, September 21, 2015

Highlights- Volatile coming month and October: Weekly Market Highlights September (1)- Continue to maintain all ratings, similar to June, July and Sept'2015: Archive- No new additions in September.- Sold all my US holdings. Cash is king now.

Comments- Changed format for security reasons; no longer quote values. Instead it's a simply profit and loss calculation (including dividend & unit reinvestment).- Next month I will revise Fair Value and add Margin of Safety (MoS) column. Also I will add Trade History as well my Watch List.

Supermax (Equity Malaysia)- Maintain HOLD. Uncertainty in local stock market.- Raised fair value (RM2.11) - following BursaMKPLC consensus target price. - Declared interim single tier dividend of 4% to be paid on October 22, 2015. - Q2'15 results are out. It was a weak quarter due to lower-than-expected sales volume and margin.- Stronger USD did help exports albeit a small extend (2.8% revenue incr q-o-q)No new developments - stronger USD will help due to exports. See below for previous month June'2015 update.- Growth in capacity from two new plants in Meru, Klang which will double nitrile gloves production from 6.9b to 12.3b pieces p.a.- SUPERMAX CORPORATION - 27 AUG 2015

Genting (Equity Malaysia)

- Maintain HOLD. Uncertainty in local stockmarket.- Maintain fair value (RM10.69). - Announced an equity buyback for 4% of its issued share capital after getting mandate during AGM held on June 11, 2015.- Q2'15 results are out. 8% decline in casino revenue acrossall geographical segments. Poorer luck factor and the sustained decline in CPO prices.

- However most of its current investments will only come to fruition in 2H15/2016 so there is no short term catalyst to prop up share price.- GENTING BHD - 27 AUG 2015

- Maintain BUY.- Asia Pacific's healthy credit market more or less can offset stronger USD in the coming months. See below for previous month June'2015 update.-Strong USD will make headwinds for Asia markets as such fund pare down exposure in equities (30% -> 20%). - Also doubled cash levels to 7% and continue exposure on Asian credit market pending US Fed's direction in the 2H15 (possible hike in Oct / Dec).

FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)

Period

1 wk

1 mth

3 mth

6 mth

YTD

1 yr

2 yr

3 yr

5 yr

10 yr

Bid to Bid Returns (%) - RM

-0.2

-0.6

0.3

2.5

6.3

8.7

16.4

20.4

46.9

115.4

Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date

Kenanga Growth Fund (Equity Malaysia)

- Maintain HOLD. Uncertainty in local stockmarket.- Because fund held so much cash, impact from recent KLCI selloff activity is not too worrisome yet as year-to-date return is still in positive territory.

- Lack of catalyst in the short term, fund holding high level of cash ~20-25%.

FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)

Period

1 wk

1 mth

3 mth

6 mth

YTD

1 yr

2 yr

3 yr

5 yr

10 yr

Bid to Bid Returns (%) - RM

2.7

7.0

0.8

3.2

13.61

4.5

36.7

60.7

131.5

379.8

Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.

Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.

Aberdeen Islamic World Equity Fund (Equity Global)

- Maintain BUY.- European markets recovered and with fund's medium exposure in Europe, fund has done well. Also it has USD exposure further strengthening its returns since the MYR has weaken considerably in July.- Fund has no exposure to China's overheated stock market and slowing economy. Fund also has 18% exposure to the already lofty valuations in US equities so impact is minimized if a correction occurs.- Fund continues to be very diversified globally; Healthcare (21%), Materials (16%), Energy (15%), Industrial (13%), Consumer Staples (13%).

FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)

Period

1 wk

1 mth

3 mth

6 mth

YTD

1 yr

2 yr

3 yr

5 yr

10 yr

Bid to Bid Returns (%) - RM

-0.6

-2.6

1.8

4.7

8.82

11.1

22.5

-

-

-

Performance figures are absolute returns based on the price of the fund as at September 15, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.

CIMB Principal PRS Asia Pacific Ex Japan Equity Fund (Equity Asia)

- Maintain BUY.- Shanghai's stock market continue to weight down to date but fund's exposure is minimal so I'm safe there is enough safety margin to absorb it. - Fund holding exposure to China is minimal ~10%.- Positive on Asian Equities but growth will be more scarce moving forward as regional portfolios are fully invested hence earnings will depend highly on stock selection.

FUND PERFORMANCE (BID TO BID CUMULATIVE RETURNS)

Period

1 wk

1 mth

3 mth

6 mth

YTD

1 yr

2 yr

3 yr

5 yr

10 yr

Bid to Bid Returns (%) - RM

-0.3

-1.0

-0.7

2.3

9.14

15.9

35.9

-

-

-

Performance figures are absolute returns based on the price of the fund as at September 17, 2015 (Last updated on September 21, 2015),on NAV-to-NAV basis,with dividends being 'reinvested' on the dividend date.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

Saturday, September 12, 2015

We are one third into September (10 days) and the current trend points to an increase of 15 sen of pump fuel price in October. Oil continues to trade sideways, swinging in the $40 - $50 range for the last six weeks. The supply glut is expected to persist as the OPEC chief says that the cartel 'not ready' to cut production. Malaysia is too small and is not part of OPEC, so 'kita tonton saja'; at the mercy of others.Yesterday BNM decided again to maintain the Overnight Policy Rate (OPR) at 3.25% (see link). The next MPC meeting is 5th November 2015 so the Ringgit's rout should continue for awhile (4.5 to the dollar any takers?). The next MPC meeting (always every two months) is scheduled on 5th November 2015 and will be the last for 2015. Zeti's (our BNM Chair) 5-year term will end next year, there is no mention that she will run again so my guess is she's not going to care about it - since PM Najib is adamant to get rid of her anyway.In other developments FOMC (US Fed) will hold their meeting next Thursday and decide if US interest rate should rise (0.25% -> 0.50%). As of now the chance of this happening is ~30% (based on consensus), again the longer this drags the worse it is for the Ringgit, we are bogged down by a confidence crisis as long as the Super Moron heads the office.Back to topic; as you know I use three factors when estimating pump fuel price in Malaysia. [1] Global oil per barrel price [2] USD vs MYR [3] Political events. Recently someone sent me an interesting diagram that depicts how fuel price is calculated (using factor #1 and #2) in Malaysia, it was accurate for last month's (September). Obviously it is hard to overlook it so by my nature I will leverage the methodology. The two input variables are Tapis crude oil price & USD/MYR exchange rate.

RM2.10/L (+15 sen) based on 10-day avg on September

If oil trades within the same range for the rest of the month while MYR continues to depreciate we are definitely going to see higher pump fuel price in October. Semua salah siapa? Cannot say hehe...

Tuesday, September 8, 2015

While most share markets managed to remain above recent lows they had a volatile week, falling back again thanks largely to ongoing worries about Chinese economic growth and the Fed, with indications from the ECB that it is prepared to ease further if needed - “the Draghi put” - providing only partial support. US shares lost 3.4%, Eurozone fell 2.9%, Japanese lost 7% and Chinese lost 2.2%.The next few months are likely to remain rough for shares as September and October are often tough months and the worries about China and the Fed are likely to linger for a while. As a result, it’s still too early to be confident we have seen the low.United StatesUS economic data was mixed with a fall in the much watched ISM manufacturing conditions index for August and slightly softer than expected employment but stronger than expected construction spending and vehicle sales, continued strong readings for the ISM services conditions index, a narrowing in the trade deficit for July and a further fall in unemployment.Cutting through the volatility the US economy looks to be continuing to grow somewhere around 2-2.5%, which is good but a long way from booming. The much anticipated August US jobs report keeps the prospect of a September Fed rate hike on the table. US bond market’s implied probability of a September hike of around 30-35% sounds about right (last week it was ~40%). It would also seem unlikely for the Fed to want to hike at this point with the markets seemingly unprepared for it, given the uncertainties around the outlook.

EurozoneAs expected the ECB left monetary policy unchanged at its meeting, but in response to downwards revisions to growth and inflation forecasts and global uncertainties has adopted a strong easing bias with a “willingness, readiness and capacity to act”, suggesting that if the downside risks don’t recede soon an expanded quantitative easing program could be announced before the end of the year. Eurozone inflation was a touch stronger but still well below target providing plenty of motivation for the ECB to do more if global risks increase. The good news though is that despite all the uncertainty lately the Eurozone composite business conditions PMI for August was actually revised up to its highest level for this recovery.

Asia

China’s business conditions PMI’s added to concerns about Chinese economic growth with the official manufacturing PMI down slightly in August and services PMIs also down. Meanwhile, the risks of a property crash – last year’s big China worry – continue to recede with home prices up in August for the fourth month in a row led by Tier 1 cities. The big focus internationally is likely to be on Chinese economic data for August. Data: exports and imports, headline inflation, non-food inflation, industrial production, retail sales and investment. Money supply and credit data will also be released.**Repeat with small modifications**

Share markets are likely to see more volatility in the next month or two. We are still in a seasonally weak period of the year for shares (Sept and Oct), uncertainties regarding China and the emerging world are likely to intensify in the short term, posing risks for global growth and the uncertainty around US Fed moves. Barring any major event, I think for now this is just a correction. Hold your horses.

Current PE: 11.40, Historical 5-Yr PE Avg: 12.19, Fwd PE Growth: 2.05. The current share price has breached below FY 2016 PE 12.50 target price of RM 1.50. This would seem to suggest that its valuation is low at this price level.*For an in depth "Fundamental Analysis" I highly recommend LC Chong's post : PADINI – Fundamental Analysis (21 Aug 2015)Also worth mentioning is Kenanga Research's brief report : RESULT NOTES - PADINI HOLDINGS BERHAD - 19 AUGUST 2015ConclusionIn valuation terms, it look quite attractive. Also the dividend yield of 7.2%at current price is a steal (which what attracted me in the first place) and would help offset further small dips in the price over the short term.Recent rout in KLSE has not impacted PADINI "yet" - has the price really bottomed out? Effects of the GST (1/4/15) on the Malaysia Consumer Confidence Index (see below) has shown no signs of recovering. Adjustment period of GST is usually one year based on the experience of other countries. Budget 2016 will be tabled in October may hold unexpected surprise.Will monitor PADINI for now and buy slowly later using cost averaging method.

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision.

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About Me

The moniker "aboi" (young chap) is what others call me. An electronics engineer by profession. Studied E&E at a local university college. I spend my free time studying, playing video games, reading and occasionally work. I also love running and would want to run an ultra marathon one day. I can be reached at the following email: nick_allianz@hotmail.com

Disclaimer: The reports, analysis and recommendations in this blog are solely my personal views. I do not link to any investment body or company. As such, I will not be responsible of any of your investment decision. Consult your investment adviser or come to your own conclusions before making any investment decision. You can always place your comments here or email me privately at nick_allianz@hotmail.com